The high Tax Collection at Source (TCS) that may come into effect soon puts travel agents at a huge competitive disadvantage. Not just that, the FM needs to clarify many issues of practical importance, most of all related to its implementation. TRAVTALK speaks to Arjun Akruwala, CA & Lawyer, ASA GST Advisory Services, on the issue.
Arjun Akruwala, CA & Lawyer, ASA GST Advisory Services, was recently invited by the Travel Agents Federation of India (TAFI) to conduct a knowledge session for its members in Mumbai. Based in Ahmedabad, he specifically caters to the travel and hospitality sectors for GST and TCS related matters.
Akruwala touched upon many sub-topics and answered a whole lot of questions for the audience. He says, “There have been a lot of clarifications from the government on TCS. There was a lot of confusion on what TCS is applicable on. Is it only air tickets, or only hotel booking, or is it applicable only on a tour package booking. So, the government has finally clarified – it would be applicable only if it is a tour package and not if it is an isolated booking of an air ticket or a hotel room.” He also took a series of questions from the members. There were questions on whether an NRI can pay for Indian travellers. “It’s important to understand that the government’s aim with TCS is to track the Indian passport holder who is an Indian PAN card holder and travelling abroad,” he adds.
There are still a few issues where more clarity is needed, says Akruwala. For example, what if there is a combination and bundling of services, which is on the same date of travel such as air tickets booked in the morning and hotel rooms in the evening? Will the government identify this as a tour package or is the transaction is an isolated booking, so that TCS is not applicable? Further, clarification on the `7 lakh limit is also required vis-à-vis if a customer is booking a package directly out of India, then he has a `7 lakh limit. If he is booking through an Indian tour operator, he has a further limit of `7 lakh.
Ajay Prakash, President, TAFI
There are still far too many unanswered questions. The government needs to speak to all the affected parties–the industry, the banks, the credit card firms, and the enforcement people. Compliances are still complex and the process is not fully in place. We hope to have more clarity.
Jitul Mehta, Immediate Past Chairman, Western India, TAFI
Both in GST and TCS, the laws are not simple. Everyone has their own understanding of the law. Some agents are charging GST and TCS on one percentage, others are charging on another. Some are not charging TCS at all. Deciding the tax slab is government’s job, but they need to simplify it.
Pradip Lulla, Immediate Past President, TAFI
The non-clarification is TCS on payments through a credit card. The banks are yet saying that they will have no way to do it. But now when you are using forex cards, you will be charged as per that. So, that needs to
be clarified. The government needs to clarify a lot of things.